(See recent posts on Phoenix Case-Shiller Home Price Index.)

Ten additional U.S. cities will be added to a closely watched home-price index used as a benchmark for investors active in housing futures trading.

Standard & Poor’s said today it is adding 10 cities to the S&P/Case-Shiller Home Price indices, expanding coverage to a total of 20 metropolitan areas. The Chicago Mercantile Exchange in May began trading futures contracts based on the S&P/Case-Shiller Home Price indices.

Beginning Dec. 26, 2006, the following cities will be added to the S&P/ Case-Shiller Home Price Indices: Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland (Oregon), Seattle and Tampa.

The Case-Shiller indices are great because they look at real appreciation, not changes in median home price.

They do “paired sales” evaluation where each sale is paired up with the previous purchase price of the same home. They do some complex math to compensate for varying lengths of ownership. The math is so complex, in fact, that their numbers come out much later than the median home sale price numbers.

For example, their numbers are released about 2 months after the end of the month. That is, the Case-Shiller September indices came out in early December.

The other housing numbers I and most people watch are from ASU (Arizona Real Estate Center at Arizona State University) and ARMLS (Arizona Regional Multiple Listing Service) which provide monthly median price estimates, and OFHEO (Office of Federal Housing Enterprise Oversight) which provides quarterly appreciation numbers.

The OFHEO also uses the paired sale technique but some people ding them for only using homes that use Fannie Mae and Freddie Mac conforming loans. That is, OFHEO numbers don’t include homes that had new loans above a certain dollar limit, currently $417,000. They also use refi appraisials which aren’t as accurate as appraisals done during the sale of a home.

In conclusion, the Case-Shiller estimates of appreciation may be more accurate.

In addition, the Case-Shiller numbers are used in the housing futures market on the Chicago Mercantile Exchange.

So, perhaps, some day we’ll be able to trade Phoenix housing futures.

That could be useful for large investors, home builders and speculators.

More here and here.